CAW And Chrysler Reach Deal: Marchionne May Get The Last Laugh

Derek Kreindler
by Derek Kreindler

Did Ken Lewenza hose Sergio Marchionne and Chrysler? Ask me that a few days ago and I may have said yes. Now that the terms of the CAW and Chrysler have surfaced, I’m not so sure.

A superficial glance at the situation seems to have the scoreboard favoring the CAW. Chrysler agreed to the pattern agreement that includes the $9,000 per worker lump sum payments that Chrysler was dead set against, as well as the return of the COLA payments in Q4 2016. Kenny 1, Sergio 0, right? Not so fast.

Ford and GM all have product and investment guarantees written into their labor agreements. Chrysler’s is noticeably void of them. One of the expected conditions of the agreement was that a third shift would be added at the Brampton Assembly plant that builds the rear-drive Chrysler LX cars. According to the Windsor Star, that didn’t happen

“In Brampton, the CAW could only secure a promise to maintain the two shifts at the plant that manufactures the Chrysler 300, Dodge Challenger and Charger during the life of the agreement. “That plant is incredibly important,” said Lewenza.”

Chrysler will keep the three-shift Windsor plant up and running for the life of the agreement. The minivans are selling like hotcakes in Canada, and dominating in the US minivan market, and Chrysler needs every bit of capacity they can get. Previous reports estimated that further investment in the Brampton plant could add as many as 1,000 jobs and be worth as much as $400 million, but there’s a possibility that rear-drive car production could leave Canada, not for the United States, but Italy.

Here’s the scenario; the next Chrysler 300 and Dodge Charger will use a rear-drive platform that will be utilized across the Chrysler-Fiat empire. Depending on the day, it can be an Alfa Romeo, or a Maserati or an SRT Baracuda. The specific models aren’t as important as the fact that it’s a global platform. And that means products based off of it can and will be built and sold around the globe. Over at Fiat, plants are running at 50 percent capacity and Italy’s economy is in the toilet. Jobs would be brought home, plants could be running at or above the magic 75 percent number and Chrysler sheds the financial burden of assembling cars in Canada.

Meanwhile, the CAW sold 1,000 badly needed manufacturing jobs (the kind they complain are disappearing in Canada) for $9,000 per worker in lump sum payments. Right now, it looks like incredibly short sighted thinking. It may be a “damn good deal” for the current workers at Chrysler, but the lack of any job/investment guarantees likely came as a quid pro quo for Chrysler maintaing the lump sum payouts. What if the CAW agreed to rescind them, in exchange for promises to expand the future of Canada’s manufacturing base?

The odds of that deal getting ratified by workers is about as likely as Sergio not saying “vaffanculo” to Canada and the CAW come 2016.

Derek Kreindler
Derek Kreindler

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  • Dimwit Dimwit on Sep 28, 2012

    This is a joke. Everyone seems to think that Mexico is some sort of paradise for assembly plants. I take it that you guys don't read the news. Mexico is corrupt and violent. Not a particularily great place to do business. Yeah, not all of Mexico is that bad, just near the US border. Urrr, right. Brampton will be fine for a while. The biggest thing will be new product and that's a concern. Sergio is playing games with the complete Empire by shuffling and witholding models throughout FIAT and only making minor changes to the Chryco models. The Dart is the only new thing they've introduced and it better be a huge success. We'll see how 2015 goes.

  • Glenn Mercer Glenn Mercer on Sep 28, 2012

    I think you are right. I'll just have to calm down, take my meds, and await the return of Alfa to the USA with some other model. I do remain convinced Alfa will be here soon, right about the same time as the paperless office arrives, and trans-Atlantic kerosene-powered dirigible service... (sigh)

  • Mike Some Evs are hitting their 3 year lease residual values in 6 months.
  • Tassos Jong-iL I am just here for the beer! (did I say it right?)
  • El scotto Tim, to be tactful I think a great many of us would like a transcript of TTAC's podcast. 90 minutes is just too long for most of us to listen. -evil El Scotto kicking in- The blog at best provides amusement, 90 minutes is just too much. Way too much.
  • TooManyCars VoGhost; I was referring more to the Canadian context, but the same graft is occurring in the US of A and Europe. Political affiliation appears to be irrelevant.
  • The Oracle Going to see a lot of corporations migrating out of Delaware as the state of incorporation. Musk sets trends, he doesn’t follow them.